NEW BERN, N.C.
— For nearly half a century, Earl Mills fibbed to others about his inability to untangle the alphabet, but never to himself.

"I knew from very early on that I was a functional illiterate," the New Bern boatbuilder says. But the father who once gritted his teeth over his inability to read "The Cat in the Hat" to his kids is now a grandfather who reads his own Dr. Seuss-inspired poems to his grandchildren.

His modest literary journey over the past decade mirrors the small gains and stubborn difficulties in a national effort to help some 40 million adults learn to read better than the title character in "Zoolander."

The first National Assessment of Adult Literacy (NAAL) report in 13 years, released Thursday, shows modest literacy gains among African-Americans and Asian-Americans, but a drop among Hispanics in overall English literacy - the ability, essentially, to comprehend newspaper articles and fill out job applications. No significant changes were measured in whites among the 19,175 people surveyed. Moreover, literacy experts say, some 1.5 million adults a year show improvement in their reading skills, and there's a 5 percent annual growth in the total number of students taking literacy classes.

Yet some 40 million American adults can't read much beyond "See Spot run," many of them concentrated in economically depressed areas from Oklahoma to South Carolina. That fact puts pressure on a national strategy that is focused on schoolchildren and that was at risk this year of losing a chunk of federal funding for adult literacy programs.

"The idea is if we put money into elementary schools and prevent the problem, that'll solve it, but it's not enough," says Rochelle Cassella of ProLiteracy Worldwide in Syracuse, N.Y. "It doesn't address a sizable population that exists already."

The situation in and around New Bern's coastal sounds mirrors the national effort. Of 18,000 people in a tri-county area who can't use words or documents beyond a second-grade level - most of them black or Hispanic - only 135 are taking classes at Craven County Literacy Council.

Hurdles impeding adult literacy include intergenerational illiteracy - when parents don't read, their children often don't - as well as economic and cultural barriers.

"A lot of literacy councils are facing stark realities of what they are able to do," says Peter Waite, a literacy expert in New York. "You need more community effort that involves parents, families, and a comprehensive approach" to literacy.

The modest gains revealed in the NAAL report, he adds, give hope: "As you begin to remediate problems with adults, you also help remediate problems with children," says Mr. Waite. "You're making double-duty dollars."

Despite the good news, Mr. Mills in many ways is an exception to the rule, climbing into the middle class by sheer willpower, math skills, and a sharp head on his shoulders. Of the 2,400-square-foot house he built, he says, "I knew exactly how many bricks went into this house, but I couldn't read." Mills read his first book, "Along the Gold Rush Trail" by Gail Wilson Kenna, at age 48. He's now read 60 books (from "To Kill a Mockingbird" to "Maniac Magee"), belongs to a book club, and is on the board of the county literacy council.

"Learning how to read means more to me than a million dollars," he says.